[first business them you're watching first business: financial news, analysis, and today's infestment ideas. good morning everybody and thank you for watching. on today's first business, a look back at the finanical news events of 2012. it was a year of market movers, political shakers, and controversy. traders sum up this year's stock market wins and losses. a former goldman sachs insider spills the secrets wall street doesn't want you to know. plus, it goes down as the most expensive election in history. the role dollars and donations played in the race to the white house. and, americans spent a staggaring amount of money at the box office this year. a look at what we watched.

but first, matt shapiro, president of mws capital, joins us now for a look back at the standout stocks of 2012. good to have you on the show this morning. > > thanks a lot angie. > definitely facebook was the leader of the pack. it was the third largest ipo ever, and one of the worst opening days ever. > > what a typical disaster for today's vacuous electronic markets. but, if you held off, remember, it was $18.75 before its last earnings report, and bounced all the way up. so, not only was it the worst ipo, but, it was a story rebound stock. and it's kind of the age of 2012, was these big tech stocks. which one do you buy and where do you buy it? > there were good times and bad for apple. at one point it was the must-own stock, and then it was "you must sell quickly before the end of the year and take home your profits." > > exactly. and you know, of course, a lot of analysts are now pounding the table. apple's valuation is very compelling in

the low $500 ranges. but of course, everyone stampeded into the stock. but, guess what happens? sometimes the story stocks work, sometimes everyone else owns them, then they want to get out. > what about google? is this a stock to own? at one point it was during the past year. > > google has done a great job. all three of these companies, facebook, google, and apple, of course, are leading the pack in terms of driving this stock market. and of course, google got back in favor and has had excellent business results. and of course, the final indignant thing for apple was that they had to have google maps go back on the iphones. but i think all three of them are going to be great investments over the next several years. it is just a matter of the timing. so, if you got into facebook in the low, that is great. if you can hold on and maybe pick up some apple here. that is also good. and i think google is going to continue to do well. > thank you matt, and happy trades to you in the new year. > > thank you.

americans spent 2012 tuning in to election coverage and those political ads. when it was all said and done, campaigns shelled out $6 billion. paul eggers gives us a look at the the money trail to the white house. it's going to be a while before you hear candidates closing out commercial breaks or you see lots of leaflets filling up your mailbox. all that communication, of course, came at a big cost. add up all the money spent on the race for the white house and for control of congress, and you'll get an estimated $6 billion. that tops the previous campaign spending record by $700 million, and is about equal to the gdp of the uber-rich riviera princiality monaco. the now-famous supreme court citizens united decision played a big role in the big money boom, allowing deep- pocketed political players to donate unlimited amounts to outside groups, or so-called super pacs, who spent nearly $1

billion on all races this campaign cycle, with a majority going to the presidential contest but more than $400 million funding congressional races. 'fundamentally, our constitution gives us the right of free speech, and it's my belief that super pacs are just exercising that right. 'yes, there is a first amendment right to free speech, but i'm not convinced money is the same thing as speech.' regadless of where one stands on the legal basis of super pacs, their growing influence measured in the dollars they spend cannot be doubted. just 20 years ago, outside groups spent just $18 million on campaigns. in 2000, that number grew to $41 million. still, those figures fall far short of the nearly $1 billion spent this time around. 'it's going to be very difficult to reign in the super pacs.' superpacs classified by the irs as 527's must dislose donors,

whereas 501 c-4s, or so-called social welfare organizations, can keep that information secret. ron gidwitz runs a 527 superpac called the new prosperity foundation, which supports republican house candidates. > do you think there's a trend away from 527's to 501c4's? "in many cases there has been." and the numbers bear that out. 527 funding actually fell from 2008 to 2012, meaning more of that nearly $1 billion of campaign spending by outside groups comes from donors who do not need to disclose their name. reporting for first business news, i'm paul eggers. moments after president obama was declared the victor, the money struggle in washington stole the spotlight as lawmakers debated over how to avert the fiscal cliff. mother nature took a toll on several parts of the country this year. superstorm sandy ripped through the northeast in

late october, leaving a trail of damage along the way. the storm racked up damage of around $60 billion, making it the second most expensive storm ever for the u.s., following hurricane katrina. the storm destroyed houses and businesses on the east coast, leaving millions without power. just months earlier, crop prices shot up following a massive drought that hit the midwest and some northern states. weeks without rain sent corn and soybean prices sky-high. it was estimated that the drought was the worst in nearly a quarter of a century. 2012 was not without its controvesies. trading scandals rocked the news, highlighted by jpmorgan chase. the big bank lost more than $2 billion in what was called "a trading debacle." ceo jamie dimon took a trip to capitol hill for a testimony where he told senators that the industry needs "strong regulation, not always more." meanwhile, at chick-fil-a, the ceo of the popular chain cooked up trouble with some very public comments opposing gay marriage. the comments created a

divide between protestors and supporters, some of whom participated in a successful chick-fil-a appeciation day. and, in a shocking move, twinkie maker hostess closed its doors, claiming a strike by a bakers' union put the company out of business. the brand laid off 18,000 employees. chuck coppola picks up the story from there. nothing draws a crowd like the last of anything. even if its made of artificial ingredients such as cellulose gum, which is also found in rocket fuel. such is the send-off consumers are giving to the last twinkies made for now in the u.s. and sent off to market. a sugar-rush worthy of black friday fell throughout chicago supermarket chain jewel-osco. the last 20,000 boxes of twinkies distributed by hostess brands were snapped up as if it was the fountain of youth in a sponge cake. "i used to eat them. when i was a kid, i enjoyed them." hostess brands filed for

bankruptcy november 16th. since then, a cream-filled wave of nostalga has transformed the junk food into an icon of americana to be preserved - as if it needed help being preserved. "the shelf life of these will be a long time." [laughs "they're just gonna have one, not tons." at this store, 171 boxes went in less than a half-hour - some destined to show up on ebay, others to provide a look back in time. "i just want my kids to have some since they won't be around anymore." reportedly, the hedge funds that assumed control of hostess brands are in active talks with more than a hundred potential buyers for the name, recipe and rights to twinkies and other products. sales have been down for years, but this flash of popularity helps sell the argument that the name is popular even if the product is but a corn-dextrin ghost from lunchtime past.

for the record, twinkies have a shelf life of 25 days. thanks chuck. still to come, a shocking exit from wall street. we hear from the man who stirred up the industry in one of the biggest stories of the year. and, why china set up shop in greece at the height of the euro crisis. but first, this "in the know" message.

the euro crisis continued to remain a major concern for investors throughout the course of 2012. at the center of it

all, greece. the country grappled with a need for bailouts with strings attached in the form of severe budget cuts that sparked protests from the people. however, the financial crisis in europe is providing an opportunity for china. earlier this year, we heard from new york times reporter liz alderman on a chinese shipping company that is making waves in greece. > > how successful has this shipping company, known as cosco, been so far in greece? > > it's an interesting story. this chinese basically state- run shipping company came in here about three years ago in a $500 million deal that ever since then has been a model for the country, because what they did is they bought half of piraeus port, which is an ancient port in greece and one of the most important ports in the southern mediterranean. what they did was they basically took an operation that had been effectively lagging under greek ownership and completely turned

it around. > > have the the greek people been welcoming of this? the chinese work way is much different from the european way, let's say. > > the chinese have an extremely efficient working practice. as one spokesman there put it to me, they basically run their business by showing that they work 24/7, that has actually rung alarm bells, though, among a number of greek workers, particularly unionized workers, reporting that they believe that this chinese company is basically bringing chinese third-world labor standards to greece and really to europe. > > i'm curious about that. how does that work with wages for instance? > > the company, cosco, took pains to try to integrate itself here in greece, to show that they were not an invader and to try to persuade greeks that they were not coming in here to basically sort of lower working standards in a bid to get higher profits.

> > what is your reporter's sense on this story? how much of a foray will china make into europe? > > as the chinese captain who runs cosco told me, europe had, for a long time, enjoyed a number of protections. they started spending a lot of money that they didn't have, and now they're paying a price. so what is going to have to happen going forward is that probably europeans are going to have to go back on a number of protections, moving somewhat in the direction the chinese are, which is perhaps to say lower wages, less protections. but europeans certainly, and certainly here in greece, are going to be fighting back against a wholesale backslide toward, again, what many see as the possibility of stumbling into third world working conditions. > > liz alderman of the new york times. thanks so much for your reporting today. > > thank you for having me. still ahead, hits and flops. a look back at the movies that brought riches and pr headaches for film studios. but first, we'll hear from the

man who shook things up after a stunning exit from goldman sachs. that's next.

wall street employees rarely go public with what happens behind closed doors. this year, a goldman sachs executive broke that code of silence with his scathing resignation letter, printed as

an op-ed piece in the new york times back in march. greg smith, author of the new book "why i left goldman sachs," joined us via skype to detail how goldman bankers went as far as calling clients "muppets," and his other thoughts about wall street. > > "i am a little surprised that the media is not actually asking goldman the hard questions: "are you riping off teachers' pension funds?" "are you selling charities products they don't understand?" and "are you betting against clients?" the answer to all those questions is yes, and unfortunately there has been an element of character assassination going on. > > other than what you wrote in the book about goldman sachs, what else did you want people to know? i know for one thing, this is a firm that is shrouded in secrecy. > > yes, and that's one of the reasons i wrote the book. goldman is a very mysterious place, so i wanted to, in a certain extent, pull back the curtain and show people how goldman and wall street make money - and not just the bad things, the good things and the bad things, because there's

certainly a value of wall street to society. but i think if there was one or two messages i would like to leave with your viewer, the one is, there seems to be a perception that the financial crisis, the problems that led up to it, have been fixed. i would like your viewers to know that less than 1/3 of the legislation has been passed, and more than 3/4 of the deadlines have been missed, and frankly, wall street has spent $300 million lobbying against the harsh rules. so, the problem has not been fixed. and secondly, people don't realize how closely this affects them. the real big players on wall street are the pension funds and mutual funds that hold people's retirement savings. > > we reached out to goldman sachs, which referred us to the company website, which includes the statements "mr. smith's op- ed portrayed a firm that is unrecognized to us, and following its investigation concluded mr. smith appeared to be frustrated about his career and future prospects at goldman sachs." do you agree with that? > > not at all. i was actually doing very well in my career. > > other than being an author, are you working right now? > > i focused a lot of time

writing the book, but what i want to do right now is i actually want to be a very vocal, loud voice for financial reform, because i think there's a real place for people from within the industry to reform wall street for the better, to make it more transparent and more sustainable and less dangerous to society. > > good to have you on the show this morning. that's greg smith, author of "why i left goldman sachs." coming up next, hollywood high: the films that lifted the box office to a record year. we will be right back.

2012 was a blockbuster year at the box office in more than one way. our movie man, erik childress, is here with a movie rewind. what a year it was. > > the fourth straight year that we have hit over $10 billion at the box office. it is going to be very close, but we are headed toward a possible record year. > let's take a look at some of the highlights of the year. we

got a bond movie this year. > > yeah. $1 billion for a bond movie. can you believe that? it did more money overseas than even "the dark night rises" did. it was a tremendous year for james bond. > and there were tragic moments, one of which involved "the dark knight," and the shooting in aurora. > > everyone sort of wondered how it might affect the box office, if people were going to stay away from the movies. clearly they didn't. they went and saw it, and it was the second highest grossing film of the year, also with over $1 billion worldwide. > "the watch," of course, though, was a poorly-timed movie because it was on the heels of the killing of trayvon martin, and it had to do with neighborhood watching. > > it was of originally called "neighborhood watch," and then they changed the movie to "the watch," and i don't think it really mattered one way or another, because it wasn't a very good movie, and people didn't want to see it. > let's take a look at the final numbers at the box office, or thereabouts. "the avengers" a big winner budget-wise this year. > > $1.5 billion that movie made. it was a tremendous hit for disney and marvel, and even with a $220-million budget, it was still a gigantic success. > also in the top 10 list, "ice age," "the hunger games," "the

twilight sagas," "the dark night rises," "skyfall," "madagascar 3," "ted," "titanic 3d," and "taken 2." "ted" and "titanic 3d" did especially well, because those were very low-budget films. > > yeah, $50 million budget for "ted." we said we thought that was going to be a gigantic hit. it was bigger than i even imagined. "titanic 3d" they were only really paying for the conversion for the 3d costs, and that was another $18 million. did over $250-some million, just overseas, so that was a gigantic hit for paramount. > now it is time to look at the box office flops. definitely everybody talked about this one, "john carter." > > "dark knight rises" cost $250 million, did over $1 billion. "john carter" cost $250 million, did about $280 million worldwide. it was a tremendous bomb for disney. > and then there's "battleship." > > yeah, "battleship," universal was very proud that it made a lot of money overseas a month before being released in the u.s., and then nobody wanted to see a movie based on a board game here. > other box office flops: "cloud

atlas," "dark shadows," "rock of ages," "that's my boy," "total recall," "abraham lincoln: vampire hunter," "the watch," as i mentioned earlier, and "redtails." > > not a very good year for a lot of these films. warner brothers got picked up by "the dark night rises," obviously, but "cloud atlas" was a big disappointment, unfortunately - it's a very good movie. and then "rock of ages," a big summer flop for them - $75- million budget. "dark shadows," the johnny depp/tim burton film, also very high budgeted. > erik, overall, what do you think mattered most for ticketgoers? do you think it was the improvements in the economy, or just great movies that came out this year? > > i think it's just great movies. you look at "the avengers," you look at "dark knight rises," you look at "skyfall" - people are saying one of the best james bond movies ever. quality matters. people only seem to think hollywood can out a product and people will just show up, and that is the case sometimes. but when you get a movie that exceeds even its own epic status and through the market and all that kind of stuff,

people just want to see it and it becomes an event, and even more people to go see it, and they tell their friends and then they go see it again. so, people just want to see great movies. that's all we want. > and it is going to be a terrific year at the oscars. thank you for all your help this year. > > thank you very much for having me. that's a wrap for 2012, and a wrap for us today. be sure to meet us back here every weekday morning. from all of us at first business, thank you for watching!

. roads and neighborhoods flooded now palo alto is asking for funding. another busy travel day as people travel and in out of the bay area for the holidays. prepare for crowds at the mall as last minute shoppers try to wrap up their holiday gifts. it is all ahead on the ktvu channel 2 morning news. good morning, thank you for joinin